No need to panic over Jay suspension: MLAs

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The owners of Ekati Diamond Mine have pushed pause on the Jay project, a large expansion of the mine that could have extended its life until 2034.

Dominion Diamond Mines, which owns a controlling interest in Ekati, calls Jay the “most significant undeveloped deposit” at Ekati.

The suspension of a proposed expansion of Ekati is not a cause for alarm, Wally Schumann, the minister of Industry, Tourism and Investment, said Thursday. NNSL file photo

If the Jay project and Fox Deep, another proposed development currently under study, do not go ahead, operations at the mine could wind down as early as 2023.

“The Jay expansion was an important economic assumption for the future of the territorial economy,” Keiron Testart, MLA for Kam Lake, said Wednesday.

“Now that that’s off the table (for now), we need to understand how that’s going to impact our economic outlook for the future, and revenue, employment – all those things that come with the mines.”

Testart does not believe news about the Jay Project should not be “a source of panic,” but said it does put lawmakers on notice.

“We need to look diligently toward to other sources of other economic activity and growth,” he said.

Dominion did not provide Yellowknifer with an interview, nor did it respond directly to a list of emailed questions. Instead, a spokesperson for the company emailed a statement from CEO Patrick Evans.

In it, Evans says the company is doing an “optimization study” of the Jay project, “with a view to reducing both capital and operating costs and optimizing the development plan and schedule.”

Until the study is complete, he said, work on the Jay laydown area – the place where equipment and other supplies for the project are stored – has been put on hold.

“The Jay project remains in Ekati’s mine plan,” said Evans.

Wally Schumann, the minister of Industry, Tourism and Investment, said Thursday there is “no need to hit the panic button.”

He said Dominion has invested heavily in exploration and is looking at other mining opportunities on the Ekati property.

“They’re just doing their due diligence and figuring out a way to make (the Jay project) work at the price of diamonds right now,” said Schumann.

Diamond prices that are likely to blame of the suspension of the Jay project, says the executive director of the NWT and Nunavut Chamber of Mines.

They have been “disappointing” for the last three-to-four years, Tom Hoefer said Wednesday.

Hoefer said it is not unusual for mines to reevaluate their plans.

“The world markets are always changing,” he said, adding mining companies are continuously looking for ways to “maximize the bottom line.”

“To have another look at Jay makes good sense if the market is not doing what you expect it to do,” said Hoefer.

The Jay kimberlite pipe lies beneath the water of Lac du Sauvage, about 25 kilomtres from the main Ekati mine site.

Mining it would require the construction a horseshoe-shaped dike similar to those built at Diavik Diamond Mine.

Preparation for the Jay project was well underway.

A road to the site was completed in October, and in a June 30, 2017 letter to the Mackenzie Valley Environmental Impact Review Board, Dominion reported that a request-for-proposals had been issued for construction of the dike.

Ekati is the NWT’s largest diamond mine in terms of employment, confirmed Hoefer.

In 2016, the mine provided just under 1,900 person years of employment, Gaeleen McPherson, Dominion’s vice-president of corporate affairs, told a standing committee of MLAs in April.

She added that Northern employees accounted for 49 per cent of Ekati’s workforce.

Previously a publicly-held company, Dominion was bought by The Washington Companies last November and was immediately removed from the Toronto and New York Stock Exchanges.

Because Dominion is no longer publicly traded, it is not obligated to disclose its financial information. As a result, it is unclear if Ekati has made changes to its closure plans.

A 2017 Closure and Reclamation Progress Report provided by Dominion to the Wek’eezhii Land and Water Board, suggests that apart from Jay, most activity at Ekati will have eased up by 2023.

The company says it is also studying the economic feasibility of Fox Deep, a proposed underground development beneath Fox, one of Ekati’s open pits.

Dominion says this operation could lengthen the life of Ekati to 2042.

Evans said Dominion continues to do exploration work.

The company has a “significant exploration program,” he said, including “extensive bulk sampling” that was done last winter and plans to drill this summer.

Speaking to Yellowknifer over the phone from Norman Wells, Testart said that community is an example of what can happen to a place’s economy when too much weight is given to a single commodity.

“You can see how the downturn in oil and gas has really hit this region hard,” he said, noting that the cost of living has gone up.

“We cannot simply hope for commodities and world markets to save us.”